Among the more serious findings of a yearly audit of the millions of dollars in state and federal funding that flows through the Los Alamos Public School System: LAPS spent $12 more than it should have in special education. The firm conducting the audit also found that a $78 check that was not cashed, was not taken off the books in a timely manner.

According to Griego Professional Services LLC, an accounting firm approved by the New Mexico State Auditor’s Office of Management and Budget, that was very good news to the LAPS officials. The auditor was hired by the Los Alamos Board of Education.

During the presentation, J.J. Griego, principal at GPS LLC, thanked District Finance Officer John Wolfe and others for making the huge task easier.

“The audit went very well this year and we were able to be in and out earlier than ever this year,” Griego said. “That’s in no short order to Mr. Wolfe, the finance department as well as all the departments we worked with including the federal programs, the state programs and pretty much everybody else.”

However, Griego also made it clear he works for the school board.

“I may say all those nice things about the administration but at the end of the day I work for the board. I do not work for the administration; I’ve come to report its progress to the board,” said Griego. “That’s why we’re called independent auditors.”

According to Griego, approximately $9 million in federal funds were disbursed to LAPS, with $8 million of that funding coming from Department of Energy outreach grants.

Griego also focused in on the district’s school lunch program, just because “this is the only district in the state that is not approximately 80 percent or more funded by the federal government,” Griego said. “I really wish more districts looked at things the way you look at them.”

The audit was given a stamp of “unqualified opinion,” which is the best grade an audit can achieve, according to Griego.

Though the report earned the best rating it could, GPS also said it had to note where the school district “exceeded budget authority” in a list of expenditures on page 125 of the report.

In question was $15,880 spread over eight expenditures, the three largest being “Capital Outlay” for the LAPS Foundation, $2,193; expenditures for “Dual credit Instructional Materials and Instruction,” $3,920; and expenditures for something called the “2010 GO Bond Student Library Fund, Support Services” at $6,739.

According to the report, “There was a lack of oversight by the district’s management and governing body of this matter during the budgetary process.”

“That’s just something that’s going to happen,” Griego said. “It’s not a reflection on the administration, it’s just that every year (the state) moves the dates further and further up, and so it’s hard to make an estimate at that time.”

The answer didn’t seem to be good enough for Los Alamos School Board President Kevin Honnell, who asked if there’s anything the district could do to keep them from getting that strike against them.

“When I read down for the cause of this, you attribute the cause to a lack of oversight of the governing body during the budgetary process. Are you suggesting then that the board do more micromanagement of budgeting to account for this $15,000 discrepancy?” Honnell asked.

“The only change that you could possible do is that at the end of the (fiscal) year, like in May and June, is be more conservative in your estimates on how much you’re going to spend on each budgetary function,” Griego said.

In response, Honnell said, “I think that would be very difficult for this body to be agile enough to catch that. I think it’s impossible.”

Griego agreed, noting earlier in his presentation that about 85 percent of the school districts his company has audited run into the same problem.

According to LAPS Superintendent Dr. Gene Schmidt, the grade is timely news as far as the district’s bond rating goes, as financial rating houses like Moody’s and Standard and Poor’s keep a close eye on annual report ratings for school districts as well as municipalities.

“We have to show is that every purchase order is justified and supported with the proper documentation, every check that is issued or received is dealt with and accounted for all the way back to the bank it came from,” Schmidt said. “The money and the billing are tested from the teacher or staff member who initiates it to the person who makes the final payment to the person that maybe writes the receipt.”

Information the district usually gives the auditing firm are past school board meeting minutes, student totals, anything that helps GPS justify the numbers and expense being reported.

The reason why GPS has to report every financial discrepancy, no matter the size, is because of state law, according to June Gladney, the school district’s purchasing manager.

“The problem is, is in New Mexico, there is no level of materiality,” Gladney said. “So other states may say ‘don’t worry about it if you find one $15 check.’ But in New Mexico you have to report it if you find one $15 check out of a $78 million budget. The auditor is required to report it.”

The good financial news is even more timely, because residents are currently deciding whether or not to approve the second half of a $40 million bond package earmarked for the redesign of some schools in the district. The voters initially approved the $40 million dollar bond package in 2009, with the understanding that it would come up for referendum every two years. This January, voters received a ballot to vote for or against the next $20 million due to be spent in the package.

“Bond agencies like Moody’s are very interested in your solvency and your ability to manage your money so part of the reward for financial responsibility comes in the rating of your bonds,” Schmidt said.

Moody’s has assigned an Aa2 rating to the $40.4 million in bonds that are currently being used to rebuild the school system.